• Transaction / Assets
    Projects Challenger & Coliseum
  • Seller
    Banco Sabadell
  • Buyer
    Cerberus
  • € MM
    3,100

Cerberus Fights Off Blackstone to Acquire €9.1bn in Toxic Assets from Sabadell

19 July 2018 – El Confidencial

Banco Sabadell has chosen who is going to take over its toxic assets. In the end, after an express process that has seen the bank receive several binding offers, Cerberus has fought off competition from the other interested parties, including Blackstone, Lone Star and Oaktree. According to a relevant fact filed by the entity with Spain’s National Securities and Market Commission (CNMV), “the real estate assets involved in the operation have a combined gross book value of approximately €9.1 billion and a net book value of approximately €3.9 billion”.

They correspond to two of the four foreclosed property portfolios that Sabadell had put up for sale, “Challenger” and “Coliseum”, which will be transferred to one or more newly constituted companies in which Cerberus will own a direct or indirect stake with 80% of the capital and Banco Sabadell will retain the remaining 20% share.

As for Solvia Servicios Inmobiliarios, it will continue to be wholly owned by the Catalan entity and will also continue to provide integral management services for the real estate assets of both portfolios included in the operation “on an exclusive basis”, according to the statement.

Once the operation, which is subject to the corresponding authorisations, has been closed, control over the real estate assets will be transferred and, therefore, those assets will be deconsolidated from the bank’s balance sheet. In this way, according to explanations from Sabadell, the sale “contributes positively to improving the group’s profitability, although it will require the recognition of additional provisions with a net impact of approximately €92 million”, which will improve the Catalan entity’s Tier 1 capital ratio by around 13 basis points.

The operation forms part of a restructuring plan designed by the entity at the end of 2017, through which it is seeking to remove €12 billion in toxic assets from its balance sheet. Sabadell closed last year with gross foreclosed assets amounting to €8.023 billion and non-performing loans amounting to €5.695 billion, according to real estate exposure data filed with the CNMV.

The other two portfolios that the entity wanted to divest are known as Project Galerna, containing €900 million in non-performing loans, which was acquired by the Norwegian firm Axactor, and Project Makalu, with €2.5 billion from the former CAM. With their sale, the entity will complete its real estate clean-up, just like Santander and BBVA have already done.

Original story: El Confidencial (by María Igartua)

Translation: Carmel Drake

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